A state review board Tuesday approved Franciscan St. James Health's plan to end inpatient operations at its aging Chicago Heights campus while expanding a newer facility in Olympia Fields.

The approval by the Illinois Health Facilities and Services Review Board came after Franciscan St. James agreed to provide funding for additional ambulance coverage for some communities impacted by the closing of emergency room services in Chicago Heights.

The Catholic health system said it is too costly to operate both hospitals, noting that portions of the Chicago Heights facility are more than 100 years old. Parts of the 312-bed hospital at 1423 Chicago Road would be torn down, but St. James plans to continue some outpatient offerings there.

The two hospitals have a combined occupancy rate averaging 40 percent, according to Franciscan St. James, which is part of Indiana-based Franciscan Alliance.

Franciscan St. James Health plans to spend nearly $115 million to expand and renovate its Olympia Fields hospital, at 20201 Crawford Ave. Also expanded would be its Franciscan ExpressCare urgent care center, 211 Dixie Highway, in Chicago Heights, which would offer around-the-clock urgent care.

Chicago Heights officials and some area first-responders, including local fire chiefs, had asked that Franciscan St. James maintain an emergency room presence in Chicago Heights. They are concerned that merging all emergency care at the Olympia Fields location could result in longer ambulance transport times, and the possibility of the Olympia Fields hospital's emergency room having to go on bypass due to high patient loads.

Franciscan will provide $1.5 million to communities including Crete, Ford Heights, Sauk Village and South Chicago Heights to provide added ambulance coverage for patients going to the Olympia Fields hospital.

Because those are among the communities farthest from the Olympia Fields hospital, the money will enable them to contract with private ambulance service providers to ensure that if one ambulance is going to, or coming from, Olympia Fields, additional ambulances will be available for other calls, according to Chicago Heights Mayor David Gonzalez.

Franciscan will also be accepting health care coverage provided by Cook County to low-income residents at its facilities, which previously didn't accept the insurance, Arnie Kimmel, Franciscan St. James' chief executive told the health facilities board.

In addition, Franciscan St. James will provide $1 million to help Chicago Heights with the redevelopment of land adjacent to the Chicago Heights hospital.

Franciscan St. James had previously said it would be more than two years before inpatient services would end in Chicago Heights while work to expand the Olympia Fields location is completed. Franciscan anticipates finishing the expansion by October 2018.

Along with modernizing a medical office building next to the Chicago Heights hospital, Franciscan St. James will offer bariatrics and obesity treatment programs in Chicago Heights, according to Kimmel.

At Olympia Fields, 24 medical/surgical beds will be added as well as six intensive care unit beds and a 14-bed physical rehabilitation unit. The total cost of Franciscan St. James' investment is $137 million, which includes about $7 million in demolition costs for tearing down portions of the Chicago Heights hospital, $5 million to renovate areas of that hospital that will remain in use and costs for expanding the ExpressCare facility, Kimmel said.

He told the board that consolidating inpatient operations at Olympia Fields will save Franciscan St. James between $18 million and $20 million annually.

The state board, meeting in Bolingbrook, also approved plans by Palos Community Hospital to expand its South Campus in Orland Park at 153rd Street and West Avenue.

Plans include building a four-story medical office building and a 125,000-square-foot underground parking garage, but the expansion was also going to spell the end of the Palos Health and Fitness Center at the south end of the property.

Palos Community and Orland Park, which owns property to the south and west of the Palos site, are working on a land swap that will enable the hospital to do the expansion and spare the fitness center. Tim Brosnan, the hospital's vice president of planning and community relations, told the health facilities board that the hospital heard the "significant and sincere" concerns expressed about the possible demise of the fitness center and is working on a development agreement with the village.

He said there will be some revisions of the layout of some aspects of the $133 million project, mainly related to vehicle access, but that Palos didn't anticipate the modifications would alter the planned June 2019 completion date for the project.

A lawsuit filed asking for a temporary injunction to stop the state board's vote on Palos Community's original plan, which included closing and demolishing the fitness center, was also voluntarily dismissed, according to Juan Morado, the board's general counsel.

A version of this article appeared in print on March 30, 2016, in the Business section of the Chicago Tribune with the headline "State OKs St. James hospital plan - $1.5M for ambulance service eases loss in Chicago Heights as Olympia Fields grows" —
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